Gordon Stein, CFO of CleanTech Lithium, explains why CTL acquired the 23 Laguna Verde licenses. Watch the video here.
Don’t underestimate the value of buying a company that is already listed, has a license to do moneylending, has software and systems set up for this, a well known brand (even if tarnished). And which probably has big tax losses that can be used to offset against future profits.
The company will likely be sold but for a nominal amount only (literally one pound perhaps). Because the debt is worth a lot more than the assets, so anyone who buys is buying negative value. The banks will never allow any write off of that debt if there is any value left for the equity, they will absolutely require the equity goes to zero first. It is simple as that. I don’t understand why this isn’t obvious to everyone.
As I understand it, there are a number of companies within the overall group and there are different lenders to different companies. So you do not necessarily need the consent of lenders to, for example, the Eastern European entities, to take steps in respect of, for example, the Israeli company. It depends on the corporate structure and the lending structure. I do not have full information but the article suggests that it is possible for the founders to take out some parts of the group because the lenders to those parts have consented. If you are a lender to a profitable and viable part of the group, and you have no exposure to a part of the group that is in a very bad state, you would be happy for that profitable part to be hived off. And then let the other lenders look after themselves. The lenders are not a united group with the same interests, risk profile, claims and goals.
It gets worse if you read further. Looks like they are then planning to buy parts of the rest of the business back, presumably in a liquidation scenario.
If I am reading this correctly, they are attempting to separate out the more profitable/viable parts of the business with the support of the creditors to those parts and then leave the rest to the other creditors to pick at the bones. Prepare for some fireworks if so. And shareholders are the shareholders of the “rest”, not the most profitable/viable parts that are to be hived off.
When people talk about Mooky’s shares, don’t forget these are financed. Loans were taken by him to finance the purchase/hold of his shares and the shares would have almost certainly been secured in favour of the bank who lent him the money. Almost certainly, I expect, when the share price crashed, the bank would have taken control of those those shares, albeit they will not appear as the legal owner. He may have already decided the shares are lost to him, if there is a big gap between what he owes the bank who financed them and their current worth or even their realistic potential worth. It’s the same if the bank lenders you 1 million to buy a house worth 2 million, and the value of the house then crashed to ten thousand. You are so far underwater that what the bank does with the house doesn’t really make a difference.
Sorry, the change of your name bladerunner was not intentional, was just the autocorrect
The point you are missing bladeberk is that a “successful” Ch 11 means the company survives. It does not means the shares come out of the process with any value. In the majority of Ch 11 successes, the shareholders are totally wiped out albeit the company still trades
I find it amazing that people on this thread still talk about “buying the dips” and “averaging down”, making out like a collapsed share price of a bankrupt company they have stock in that is sinking even further and approaching zero is a good and exciting opportunity.
This is very true. I came to the same conclusion when on the Rolls Royce Holding’s chat board. This group of guys who had been giving “investment advice” were involved in a discussion about Rolls Royce cars, clearly not having any idea that the car company was nothing to do with the aero engine company and not even understanding that when it was pointed out to them. And on this board, the lack of awareness of what Ch 11 is becomes very apparent.
Oh well, my view on the stock has changed, because you saw some people eating popcorn at the movie show. Time for an RNS? “Some popcorn was today eaten in one of our movie theatres. This is a positive sign for the prospects….”
It’s amazing how investors who don’t understand what a debt to equity is, or how it works, are trying to give advice on debt to equity transactions
Those lenders are not really putting much more money in because most of the new loan will be used to pay off their own earlier loans, with them now getting higher interest rates for those new loans than the old loans they paid off.
It amazes me how so many investors pretend they are happy with a share price drop of shares they hold so they can “top up” or “average down”.
They know if the sell the price will collapse to near zero as the market could not absorb their shares.
Looks like the judge is not happy with the proposal which allows the existing lenders to advance more money at a high interest rate but with that money then used to repay their existing debt. So he says what about the employees?
The debt levels are horrendous. An average of just over 10,000,000 pounds for each of their 751 cinemas. That is the real issue.
There can be more buy orders than sell orders. Maybe that is what he means.